Equitable Growth responds to passage of the Inflation Reduction Act
FOR IMMEDIATE RELEASE
CONTACT: Katie Wilcoxson, kwilcoxson@equitablegrowth.org
WASHINGTON – President Joe Biden today signed the Inflation Reduction Act, which will provide $430 billion in funding for historic investments in combating climate change, lowering healthcare costs, and targeted tax reform. The new law will help Americans fight the impact of inflation by decreasing the cost of energy, prescription drugs, and health insurance while simultaneously raising the federal revenue required to pay for its new programs and reduce the federal budget deficit.
The Inflation Reduction Act also is a landmark milestone in mitigating climate change, which evidence shows has inequitable economic effects on middle and lower income households, a disproportionate number of which are families of color. With more than $300 billion in funding for clean energy and climate reform, the law makes the largest federal climate investment in U.S. history, and is estimated to lower greenhouse gas emissions from 2005 levels by 40 percent by the end of 2030.
Other key investments include:
- A $2,000 annual cap on out-of-pocket prescription drug costs and a $35 monthly cap on insulin for people with Medicare benefits
- A measure allowing the federal government to negotiate prices of certain drugs for Medicare
- A three-year extension on healthcare subsidies in the Affordable Care Act that will keep premiums at $10 per month or lower for most people covered through the federal and state health insurance marketplaces
- A 15 percent minimum tax for corporations with profits of $1 billion or more
- A 1 percent excise tax on stock buybacks
- $80 billion in funding for the IRS over ten years to increase anti-tax evasion enforcement at the top of the income spectrum
The strong evidence behind the investment and revenue components of the new law have garnered widespread support from former government officials, budget experts, and academics. Earlier this month, the Inflation Reduction Act was notably endorsed by 126 economists in a letter co-organized by Equitable Growth.
“We applaud President Biden and Congress for enacting the Inflation Reduction Act,” said Equitable Growth Vice President Melissa Grober-Morrow. “By making long overdue public investments to tackle climate change, strengthen tax enforcement, and ease the cost burden of healthcare and energy for families, this law is rooted in years of research on how to build a more equitable economic future that benefits all.”
Notably, the law does not include social infrastructure policies that economic evidence shows would effectively combat inflation, drive economic growth, and help bridge racial and gender inequality. Investments in child care, home- and community-based services, care for older adults and people with disabilities, paid leave, and an expanded Child Tax Credit were all omitted from the final version of the Inflation Reduction Act.
“This new law offers strong support for critical sectors of our economy and will reduce cost pressures on households. But the United States will not be able to realize its full economic potential until we strengthen our weak social infrastructure system and rebalance power in the economy,” added Equitable Growth Chief Economist and Director of Labor Market Policy Kate Bahn. “The economic evidence is clear. Investing in American workers and families is crucial to fostering strong, stable, and broad-based economic growth. We celebrate the steps that the Inflation Reduction Act made today, and we look forward to working with policymakers and researchers to help build a better economy for tomorrow.”
###
The Washington Center for Equitable Growth is a nonprofit research and grantmaking organization dedicated to advancing evidence-backed ideas and policies that promote strong, stable, and broad-based economic growth. For more information, see www.equitablegrowth.org and follow us on Twitter and Facebook @equitablegrowth.
